FEATURED CONTENT

Bull or Bear Market… Doesn’t matter

Kyle Dennis’ new, 5 Min Strategy is poised to double Your Money Weekly!

Michael S. made 173% with Dollar Ace. So can you!

 

Why not: Verastem Inc. (VSTM), despite run-up and looming data

Kyle DennisKyle Dennis ·

The set-up: Verastem (VSTM), a maker of novel cancer drugs, will report data from a Phase 3 trial any day now. It’s a really great catalyst play — VSTM started making a move in March, after staying just above $1 a share for 17 months. It pulled back at $3, then came back and hit $4.10 on Thursday before closing at $3.90. The results are expected “in the latter part of summer 2017,” so depending on how you define “summer,” they may hit Friday – the last trading day before Labor Day – or sometime before Sept. 21.

Why I’m not holding it long-term: After running up 300 percent, the risk/reward on Verastem no longer is impressive. The drug duvelisib is in Phase 3 trials for an indication of relapsed/refractory chronic lymphocytic leukemia and small lymphocytic lymphoma. The next result will be a Phase 2 study for a different indication on the same drug, so the company has a lot riding on its main offering.

Verastem is small for a cancer drug developer, with a market cap of $135 million. If it fails in these trials, it puts the rest of its cancer pipeline in doubt. I day-traded VSTM July 28 for a nice profit, but it’s way too risky to be holding it right now.

Some perspective: Since I’ve been doing this, only one company under $200 million has had good cancer trial results. After it reported positive data on a leukemia drug, Celator Pharmaceuticals, Inc. (CPXX) ran from $1.53 to $8.70 in a day and $30.25 in less than three months. CPXX was acquired last year by Jazz Pharmaceuticals PLC (JAZZ) in a $1.5 billion deal.

The bottom line: If you didn’t buy Verastem at $1.50, don’t buy it now.

#-#-#

 Kyle Dennis runs Kyle Dennis’ Biotech Breakouts (biotechbreakouts.com). He is an event-based trader, who prefers low-priced and small-cap biotech stocks.  He currently has no shares, options or open orders in VSTM; he last owned the stock on July 28, when he played it as a day trade for a $1,120 profit.

You may also like

Exclusive System Tracks Wall St. Insiders

“Dollar Ace Simply Exposes Information That Wall Street Wants To Keep Quiet” Said Kyle Dennis
“One member, Wesley M., has already reported 360%+ gains in just a few short days. Don’t miss this!”
(Reserve Access Now)

“What Recession?!” Jason Bond nets $55,060 in realized profit in One Day

After going 6 for 6 on profitable trades recently, we caught up with Jason to ask how he did it.
Check out Jason’s exclusive interview revealing this tightly guarded strategy. (Watch Now)

RagingBull.com Co-Founder, Jeff Bishop, Launches High Conviction Trade Service

“We listen to our clients and we give them EXACTLY what they want, so we designed a service to deliver 1 trade, 1 time a week, with a 100%+ PROFIT TARGET, directly to your inbox every Monday before the market opens. (Read More)

Be a Better Stock Trader, Starting Today

Get the expert insights, tips and strategies you need to optimize your trading skills and profiles
START NOW